What accountants need to know about performance reviews. Next question: How's your job? Join the survey; see the results.

July 20, 2009by Rick Telberg/At Large

If you’re waiting for your next performance appraisal to see how you’re doing, it’s already too late.

It’s too late because if you don’t know, you’re already behind the curve. It’s too late because if you need to ask, your boss probably doesn’t want to tell you. And if your boss doesn’t want to tell you, then you probably won’t like what you hear. It’s too late because if your company or firm isn’t keeping you apprised, then it’s probably a company or firm that’s falling behind the competition.

According to the Society for Human Resource Management, 90 percent of HR professionals say their companies under-utilize or misuse performance appraisals. So if the annual performance review process at your accounting firm or finance department feels like a waste of time you’re probably right. But that doesn’t relieve you of the responsibility to know how you’re doing. It just it makes it more difficult.

So it’s safe to say that most accounting firms are probably doing performance reviews wrong, or poorly. In fact, I’ve been looking into the issues of performance and compensation at accounting firms lately. There’s huge competitive business opportunity for the companies and firms, professionals and executives who want to do it well, when so many others are doing it so poorly.

Former AICPA chairman Bob Bunting has said that the main job of a leader is to help create new leaders. Indeed, it may be one of the decisive factors separating leading CPA firms from the laggards. According to new research cited by CPA firm consultant Jean Caragher, firms that are good at grooming new leaders are also about 16 times more likely to succeed in achieving other business objectives.

Rita Keller, the practice management consultant with a focus on HR and staffing issues, says the one thing that more firms could start doing better immediately is simply providing more feedback, more frequently. Sounds pretty simple. But for a lot of accounting professionals, it’s apparently a big leap. Keller says managers need to meet at least twice a year with each direct report for an open and honest give–and-take. But even more importantly, managers and staff should be reviewing performance after each client engagement. After-action debriefings work for organizations from the U.S. Army to the U.S. Agency for International Development (see their PDF on the subject). They can work for your firm, too.

Still, the goal of every finance or accounting manager must be to catch people doing things right. It’s too easy to focus on mistakes. Reflecting on the positives takes a little bit of learning for most people. For every instance of criticism — negative feedback — a manager must find at least five occasions for praise, or positive reinforcement, according to human behaviorist Aubrey C. Daniels, author of the new Oops! 13 Management Practices That Waste Time and Money. By the way, number one on his list? “Employee of the Month” But that’s another story. Number three: Performance appraisals.

Indeed, the best that can be said about performance reviews in most offices is that they happen so infrequently, so as if to discourage and distract only infrequently. “The best way to double the effectiveness of the typical annual performance appraisal is to do it once every two years,” Daniels quips.

This means, of course, that staffers need to work that much harder to master the fundamentals of their job. On their own, they must determine a company’s mission, vision and values. They must figure out on their own what’s expected, how to obtain the resources and materials they need and the best way to get the job done. Come to think of it, they must be manager and employee both.

Disclaimer: Any views expressed in this article do not necessarily reflect the views of the AICPA or CPA2Biz. Official AICPA positions are determined through certain specific committee procedures, due process and deliberation.